Remarks and a Question-and-Answer Session With Regional Editors and Broadcasters on
Domestic and Foreign Policy Issues

February 9, 1983
The President. Gee, Karna [Karna Small Stringer, Deputy Assistant to the President and Director of Media
Relations and Planning] all of these cameras are on my bad side. [Laughter]
Well, it's wonderful to have you all here today. And although I greatly enjoy the back and forth
with the White House press correspondents, I do look forward to speaking with some of you
who've managed to permanently escape the snares and traps of life in Washington.

Being in the business you're in, I know that you're aware that after 2 years of back-to-back
double-digit inflation, we've brought it down to 3.9 percent for 1982. You might not know that
for the last 3 months of '82 -- and this is significant, I think; it certainly is in my mind -- inflation
was running at an annualized rate of 1.1 percent. Now, this has made an enormous impact on real
wages. For the first time in 3 years, they increased by 1.8 percent in 1982 and, in the last 3 months
of the year, at a 3\1/2\-percent annual rate. Interest rates have dropped significantly from -- the
prime rate is down nearly 50 percent.

And in December the economic indicators, the index, was a full 6.2 percent above last March's
low point. Housing starts are also up by 45 percent during the last quarter. The new homes sales
have grown 75 percent since April of last year. Housing permits are up 75 percent -- or 61
percent, I'm sorry. And the inventories of unsold homes are now at the lowest levels in more than
a decade.

Auto production, in this quarter, is scheduled to increase 22 percent over last quarter. And
General Motors alone is recalling some 21,400 workers. The sharp decline in unemployment last
month, which is usually the last indicator to show any upturn out of a recession, was the most
heartening sign of all.

We still have a long way to go, but we've turned the corner and are moving forward. And I'm
proud of one thing. We didn't panic when we hit the heavy weather and go for the fast bromides
and quick fixes, the huge tax increases or wage or price controls that were recommended by a
number of people. I think our stubbornness -- if you want to call it that -- will quite literally pay
off for every American in the years ahead.

The second issue I want to mention is defense spending. And I won't launch into another
statistical report and tell you this year that defense spending is only 26.7 percent of the Federal
budget. I won't even tell you that the Soviets are still outspending us by devoting 13 to 14 percent
of the gross national product to defense while we're devoting 6.7 percent of ours -- only about
half the rate. I could tell you about the strides we've made at the Pentagon under Cap
Weinberger's superb leadership.

During the 6 months ending September 30th, 1982, the end of the fiscal year, the Department of
Defense auditors had identified more than a billion dollars in potential savings on waste and fraud
and from management efficiencies. Over the next 5 years, through multiyear procurement and
other acquisition initiatives, we'll save over an additional $15 billion. That's more than the entire
budget for the Department of Housing and Urban Development.

Thirty-two percent more of active duty units are combat ready, and reenlistment rate is up at 68
percent. That's the highest since 1964. But you know, our progress in that goes far beyond
statistics, beyond bombs and rockets and budgets and bureaucrats. The real issue is the security of
the United States and the American people -- our willingness to bear the burden that comes with
freedom.

We have begun to correct a decade of neglecting America's defensive needs, but we've only
begun. President Kennedy once said that there was no discount on defense. He was right, and I
think the American people knew that he was right. The defense issue is one of the most potent in
American politics. And time after time, the American people, when given the facts, have made it
clear that they support a strong defense program.

They've never had patience with politicians who want to have a fire sale on national security or a
bargain basement military. But right now, they've had a drumbeat of criticism based on false
charges. Defense spending is not the cause of our economic problems, and without it, we'd have
no chance of negotiating on arms reductions and getting an agreement with the Soviet Union in
that field.

And that's all I'm going to talk about now, because I know you'll have some questions.

Representative Phil Gramm

Q. Mr. President, I'm Frank May from Bryan, Texas, and we're having a special congressional
election involving one of the chief architects of your economic program down there Saturday. My
question is, do you see that election as a referendum on Reaganomics, and how do you view the
outcome? How will it affect getting your budget proposals through Congress, win or lose?

The President. Well, I think it would have an effect either way. I recognize, though, that it may be
portrayed as being a referendum on some policy of government. On the other hand, there are
some other issues in there. Here is a man who had the courage to -- he could have just changed
parties and stayed in the Congress. But he said, no, he had run and won as a member of the
Democrat Party, and he felt that it was only fair that he go back and give them a chance, now
knowing that he has switched parties.

I admire his courage very much, his principle. And I admire very much his mind, because he was
an outstanding help to us in getting our economic program started. So, obviously, I've got a great
interest in how he does down there. And I'm going to watch him with great interest.

Yes. I'm sure that it would be taken as a referendum in some ways by many people -- if he's
turned away.

Defense Spending

Q. Don Mulford of the Montclair Times, sir. Do you feel that ``The Winds of War'' is helping you
keep the defense budget from being cut? [Laughter]

The President. You know, I asked somebody the other day -- having looked at a couple of
installments of that myself -- I said, ``Do you suppose that this could be a help to us'' -- [laughter]
-- ``because it reminds us of how blind so much of the world was to the threat that many years
ago?'' And, of course, how much of it is -- it's more than half the population of our country today
was born after the World War II. So, it's kind of like the Civil War must have been when I was
born. [Laughter]

Oil Production; Agriculture

Q. Mr. President, we've discussed the problems of the cities. We've heard a great deal about that.
But there are some problems in, primarily, agricultural and energy producing States -- Oklahoma
being one of them -- a combination of wheat farmers going bankrupt and very concerned, an oil
industry that is staggering right now under not only windfall profits taxes but a new excise tax
being proposed -- a per-barrel price of what I understand now is $7 a barrel. They're worried
about incentives to produce. Why should they buy it?

The President. Well, we hope they'll keep on producing. I remember that when I first proposed
decontrolling oil -- getting rid of the government controls -- voices were raised saying that the
price of gasoline would go to $2. Well, I've always believed in the marketplace, and this
confirmed it, because the price of oil has gone down. I think that, maybe, the marketplace is still
going to take care of it.

I never was in support of the windfall profits tax. This new proposal, I think, if you look at it
fairly, is a tax that I hope would never be put into effect -- that or the surtax. What we did was
propose a tax that would only be implemented under certain conditions. And one of the primary
considerations was only if the Congress had joined in continuing to reduce Federal spending and
get the cost of government down. And if they haven't adopted those proposals and done that, then
this tax bill would never go into effect. There were some other things, also, that we still have. We
had to be definitely out of recession, and the deficit had to be a certain percentage of the gross
national product.

With regard to the farmer, we're doing a number of things and working on this very much. The
farmer is truly a victim of the cost-price squeeze. And the farmer is one who, many times,
borrows to plant, and through harvest, and then pays back. And with the high interest rates, they
have been really caught in a trap. And when the price of their product went down -- so, we're
doing everything from working on promoting international markets, more export for them to
meeting some of their problems, and some of the problems of soil conservation.

We have a plan that we've proposed, also -- and many farmers are most supportive of it -- and
that is, rather than cash helping in their problems, using that great surplus that the Government
owns and that is stored in Government surplus, but which, hanging over the market, has a
tendency to depress prices just psychologically by virtue of its being there. And we're talking
about a trade in kind, that a farmer who leaves idle some of his land in the interest of soil
conservation, we'll give him the amount of crop that he would have raised out of that surplus.
Maybe we can get rid of that surplus.

I'm going to have to move out there a ways.

1984 Presidential Campaign

Q. Mr. President, last night Mr. Meese[Edwin Meese III, Counsellor to the President] said in Cambridge -- I'm Joe Davis of
Boston, Massachusetts -- and last night Mr. Meese said in Cambridge that, he indicated that he
thought you probably would run again. Do you care to share with us your thoughts on that
particular subject?

The President. Well, I think that it's, first of all, it is too early for anyone in this position to make a
decision on that. So, my answer has always been if you state too early you're, one way you're a
lameduck, and if you state too early the other way, then everything you try to do is viewed as
being politically inspired. And so, my safest answer is I will let the people determine whether I
should run again or not.

Volunteer Programs

Q. Mr. President, Mort Crim of the Post-Newsweek stations in Detroit. Some of our autoworkers
in West Germany have taken pity on the unemployed autoworkers in Detroit, and they're sending
food parcels to them. And they've discovered that it's not practical, because the cost of
transportation is worth more than the food. They have further proposed that U.S. military aircraft
be used to airlift some of these supplies, sort of a reverse Marshall plan.

Would you be willing to authorize the shipment of these donated goods to Americans, to
Detroiters in particular, on military aircraft? And if you do accept that plan, would it be a
recognition that we need a Marshall plan?

The President. Well, I don't think we need a Marshall plan that we cannot provide. We provided
the first Marshall plan; I think we can provide the second.

I had heard about this situation and have not had an opportunity yet to speak to Secretary
Weinberger about it. I think it would have to be -- if it were done -- and I would have no quarrel
with that -- I would think it would have to be in planes that were making regular runs, because we
could just simply add to our deficit at a greater cost than, again, the food would be worth -- --

Q. But that was the proposal.

The President. -- -- if we were to set up a regular transportation line, because those planes don't
fly for nothing.

No, but something that we were speaking about here earlier -- and I would like to pass this on to
any and all of you for your communities -- we've had for a year a task force of citizen volunteers,
called the Private Initiative Task Force, that was out finding out what the people can do at a
volunteer level, at the people level, to help with many of the problems that we have. And they've
concluded a year's work, and we now have a computer-manning staff here in the White House, a
computerized program that contains more than 2,500 programs that arrange everything from
things of this kind, providing food to the needy to intercepting and heading off dropouts in school,
every kind of program that you could imagine -- some of them totally volunteer, some of them
combination of volunteer in connection with public officials through grant programs -- 2,500 or
more of them with the names, the communities where they're successful, the names and the phone
numbers of the people who manage them. And for anyone in their communities and for you who
are in the business you're in of communications, to put people in touch with this, to find out how
someone else is solving a very real problem that you have in your community -- I highly
recommend it, because out of all of this problem that we have, it is amazing the ingenuity of the
American people, the willingness, and their ability to come together and solve many of these
problems.

Incidentally, in connection with this need and whether the Air Force could or not, I want you all
to know also that the problem -- another one that we happen to be talking around the table here,
of the people with no shelter, that are on our streets now, our military is already checking on
military installations for barracks space that can be made available for shelter for those people.

Views on the Presidency

Q. Mr. President, Ed Lecius from Nashua, New Hampshire. We've been reading in the Union
Leader in recent weeks and hearing from our senior Senator Gordon Humphrey, that they feel
that you're moving away from the policies and principles that got you elected. How would you
react to those statements by them?

The President. Well, I had a fine conversation with Nackey Loeb recently. We ran across each
other when I was in Boston. And I know that it can look that way.

I'm not retreating an inch from where I was. But I also recognize this: There are some people who
would have you so stand on principle that if you don't get all that you've asked for from the
legislature, why, you jump off the cliff with the flag flying.

I have always figured that a half a loaf is better than none, and I know that in the democratic
process you're not going to always get everything you want. So, I think what they've misread is
times in which I have compromised -- for example, our entire economic program.

I proposed three 10-percent-a-year cuts in the income tax, retroactive to January 1st, 1981. There
was no way I could get that with the House of Representatives dominated by the other party. So,
I settled for a 5-percent cut the first year, not retroactive but on October 30 -- or on October 1st,
the beginning of the fiscal year; then two following 10-percent cuts. Well, I think 25 percent, a
little delayed in starting, was better than going down fighting and not getting anything at all.

And I wish that I could get more people to realize, no, I have not retreated from what was our
original purpose. I am very stubborn in that regard. And I'm just going to have to try and
communicate better, and make people realize that, you know, I come back and I ask for more the
next time around.

Q. Mr. President?

The President. Excuse me. I'll take the lady, and then I'll come back to you.

Employment Programs

Q. Thank you. I'm Chris Wagner from WPVI in Philadelphia. You were just talking about
compromise and not getting everything that you want. It seems that both sides of the fence in
Congress now are really pushing for some type of jobs bill that goes beyond what you have
already proposed. In which areas are you willing to compromise now? And when can we expect
to hear a compromise proposal from you?

The President. Well, some of the things that have been proposed are the type of job bills that
we've used in the seven other recessions that took place after World War II up until now. They
were make-work job programs; they were temporary; and they increased the deficit spending.
They set back the economic recovery. And no one paid any attention to the people who lost jobs
over here in the private sector as this money was moved over here to create jobs.

We disagree with that. But what we do have in our budget already -- and we are working
together for a bipartisan approach to this -- is that we are looking at all the agencies and
departments of government that have already built into the budget programs of construction, of
maintenance, of upkeep, and so forth that they need -- and with the idea of accelerating those and,
wherever they have them scheduled, doing them now.

But we also have in the budget, and we have passed, job training. And we have some approaches
to working with the States in their own unemployment insurance to see if this cannot be utilized
not just as insurance payments or benefit payments but utilized to further job training and even for
relocation from people for where there are no jobs to other places where their skills might be
desirable.

All told, we've got $93 billion in the proposed budget for the needy and for the help to the
unemployed. And we have a program that is several billion dollars already -- that I think when
they have time to study it, that it is dealing at work. But it won't be make-work. It'll be legitimate
work such as the highway program, the 5-cent gas tax for that. And to all of those of you who
said that I had stood in a press conference and said I would only give in to a gas tax if there was a
palace coup, at that time I was talking, the gas tax had been proposed as a contribution to general
revenues.

But more than a year ago, the Secretary of Transportation had brought us a report on the state of
the highways and the bridges in our country and the very risk of -- it was almost an emergency
situation. And I asked him then if he would come back a year later with it, because of our
economic problems. He did. And that's why the present gas tax is devoted completely to the
repair and the building of those bridges and so forth. And is already taking an effect in
employment in the various States for construction.

Q. Can I just follow up on that a little bit? So, you're saying that the compromise part -- the new
part then in which you will work with Congress -- will be speeding up, accelerating construction
programs that were in the works for later on down the road?

The President. That's principally it. Yes.

Q. When will the specifics of that be spelled out?

The President. Well, that's pretty hard for a President to say, once something gets up on Capitol
Hill. But our people are in contact with them and talking about it.

The Middle East

Q. Roger Sharpe with WABC in New York. Earlier this week, you voiced some criticism or at
least frustration over the Israeli attitude on the discussions with the pullout in Lebanon. Do you
think the report now from the judicial commission on the massacres in Beirut will help speed up
this process, or do you think it'll further complicate it?

The President. Well, I'm really afraid to comment on that either way. That's a strong democracy.
It's an internal matter. And I think we stand back and keep hands off of an internal matter of that
kind.

We sent Phil Habib [President's Special Representative for the Middle East]back with further recommendations in the plan that we had
originally proposed. We hope that we can accelerate the withdrawal not just of the Israelis but of
all the foreign forces -- the Syrians and the remnants of the PLO that are still there -- because we
believe it essential to the overall peace plan that I proposed -- must be the reestablishment of a
government in Lebanon that will be sovereign over its own territory. And that can't happen, and
we can't get the cooperation we need from all parties until everyone withdraws to their own
borders. And we're going to continue along that plank.

Can I take just a couple more?

Ms. Small. One more, Mr. President?

Social Programs

Q. Mr. President, Liz Walker from Westinghouse in Boston. First of all, I bring you greeting from
the Eire Pub. [Laughter] Their economic future has been brightened with your visit.
[Laughter]

I've heard a lot of numbers this morning, and I'm trying to put that on human terms, especially
with some of your budget proposals' cuts. For instance, about a quarter of a million meals would
be cut from the elderly meals program. And I'd like to, on human terms, be able to tell those
people, those 50,000 elderly in the Bay State, what that's going to mean or what they can do to
sustain themselves, having lost a quarter of a million meals with your proposal in the budget.

The President. I can only tell you that the only cuts that we've proposed are cuts that are aimed at
eligibility that ensures that what we're doing is going to people who require the help. Many of our
programs -- the eligibility requirements that have gone on over the years have been weakened or
loosened, or administrative practices have been such that we found that we're helping people that
really are not eligible for that help.

We are providing in the budget that we've submitted -- we will be providing 95 million meals a
day in this country. Now, some people I've seen have suddenly seized upon a figure that has to do
with school lunches, and they've said, ``Ah, there's a reduction in the number of school lunches.''
Yes, there is, because for one thing there's a reduction in the number of children in school. That
has fluctuated. Maybe the baby boom is over, but suddenly their enrollment has dropped. So,
there is that need.

We also have eliminated from school food programs a number of rather exclusive, high-priced
schools in which there's no question about the ability of the parents of the students in those
schools to provide for them. And between those two and between ensuring that the eligibility rule
either reduces the food support for students from families with incomes that are above a level
where they should not be getting help from their fellow taxpayers, we haven't harmed anyone who
has real need. They'll all be provided for.

And, as I say, 95 million meals a day -- I've noticed that in the criticism that we have -- with
regard to food stamps, there are more people provided for in our budget than have ever received
food stamps before. The amount of money being spent on food stamps is greater, but what we
have cut is a projected increase that was based again on standards and eligibility. For example, we
have already uncovered over a billion dollars in error and fraud in food stamps, and we don't think
that the people that are paying for the food stamps should be helping those who are fraudulently
using food stamps.

The safety net is intact and is providing for those people that have real need.

Q. Mr. President?

The President. What? I've got to -- --

Q. One more?

The President. All right. I know, I'm supposed to -- --

Federalism

Q. Tim Weigel from Chicago -- and I apologize. My question is, we read so many studies about
how tax dollars leave the Midwest and the Northeast. They go to Washington, and then they
distribute it to California, Florida, Texas, for defense spending. What can we do to make defense
spending more equitable for the entire country and to turn off the outflow of dollars from the
Midwest to the Northeast and just make it a little bit fairer for everybody, or more fair?

The President. In this regard, the Government is a customer, and the first requirement is to give
the contracts where the product is being made and where you can get the best buy for the money
invested. So, national defense has to be the first priority.

We have and do make efforts where there are items in contracting that can be spread more in the
civilian nature -- not particularly weaponry -- we have made efforts to aim at the economically
distressed areas to spread that more evenly. But, for example, if you're going to build warships,
you have to go where the shipyards are. If you're going to build airplanes, you have to go where
the airplane companies are. But since the target is the security of the entire Nation, it's only fair
that the entire Nation pays for it.

We could say the same thing, couldn't we, about private industry, that certain States have almost a
monopoly on a particular industry that services the whole country, and so the people in all those
other States -- but then by the same token, the people in those other States make things and grow
things that are sold nationwide. And we've never had in our country a kind of a -- making State
borderlines like national lines with tariffs and so forth.

I feel that what probably is more irritating to some than whether the money goes back for
something the Government must buy, as any customer has to buy something -- and we go where
it can be sold -- is the truth that in many of the Government programs, practically all of them, it is
true that there are a number of States in the Union that are considered the rich States, and the
amount of tax money that they provide to Washington, when it is redistributed in programs, is
redistributed to other States that are not paying proportionately the same share. And it's based on
the idea that some of those other States have greater need. This is one, though, that I think should
constantly be watched, that a little cluster of States, industrial States, for example, don't wind up
supporting the people in others.

My criticism of many Federal programs over the years has been -- and we're trying to correct this
-- has been that when suddenly the Federal Government says, ``We're the only ones that can have
a program of aid to rapid transit,'' well, then you find since 75 percent of the people live in cities
and the cities are where they have the rapid transit, so that 75 percent of the people are paying the
taxes and couldn't they be much more efficient and do it better if they taxed themselves at the
local level, because if the people in Chicago are being taxed to help Metro in Washington, D.C.,
or rapid transit in New York, but the people in New York are being taxed also for the rapid
transit program to help the people in Washington and in Chicago. And maybe if the Federal
Government would just get out of the way and say, ``Look, we'll give up the tax source, and you
just do what you want to do for your own problem here at home,'' because the Federal
Government has a larger carrying charge than most local and State governments have.

And I think that there's a lot of room, and these are some of the controversial things we've been
trying to do. And we're sending our missionaries up on the Hill as often as we can to convince
them that it'd make more sense if local governments -- and, incidentally, we haven't done enough
to tell you how far we have gone with our federalism program and how much we have re-altered
the whole structure of government in turning back to States and local communities functions they
can perform better than the Federal Government can perform for them.

Now, I know that I have to go and I know there - - -

Ms. Small. Thank you, Mr. President.

The President. That's got to be the last one, and then I'll go. All right.

Minimum Wage

Q. Jane Waldman, Boston, Massachusetts. You proposed the subminimum wage for teenagers to
reduce unemployment. Can you explain how this will reduce youth joblessness while not
increasing adult joblessness?

The President. Now, wait a minute. You're talking about -- --

Q. Subminimum wage for teenagers.

The President. A second minimum wage, a different minimum wage for them.

Q. That's right.

The President. Yes, the figures of the minimum wage that we have seen going back to its very
beginning and then every increase that went on -- you can look back at that, and the line on the
chart of unemployment for teenagers, or young people, goes right along, increasing with the
increase in the minimum wage. In other words, young people basically do not have a job skill.
They're entering the job market for some job that the employer can afford to hire an unskilled
person for and teach them whatever needs to be taught. But many of those jobs are jobs that if
you make them too expensive, the employer does without the job being filled.

And I have believed for many years, and my experience as Governor and working with youth
groups on this, that the minimum wage, which is really based in mind of the mature employee, the
person with some job skills and so forth, this never should have been applied to young people that
are going to school, that are looking for summer jobs, that are looking for after-school jobs, and
so forth. And I think that the best thing that we can do -- I know that it would be this, again, your
question about am I retreating, I know it'd be hopeless to ask to eliminate that for such young
people. That would be the right thing to do.

I can take you way back before there was such a thing -- when I got my first summer job. It was
with a construction gang that was remodeling old homes and reselling them. And before the
summer was over, I ended up laying hardwood floors, shingling roof, painting -- did everything
but electrical and plumbing. And there weren't any government programs that made the employer
have to hire an auditor and deduct from my paycheck for social security or other programs of that
kind. He could just reach in his pocket every week at the end of the week and count out what he
owed me and hand it to me in cash.

And I wouldn't give up that experience I had for anything in the world. And I think that young
people today are in that same situation and would like to do that. But today it's not only the
minimum wage, but with all the many useful social reforms that we've put in, of unemployment
insurance and social security and other things of that kind, we have made the wedge for the
employer. The difference between what the employee actually gets and what it costs the employer
to hire him is so big that he just can't afford to take those young people on.

With regard -- I know I mentioned the untouchable: social security. But I remember when I was
doing the ``G.E. Theater,'' and they one day wanted our 3-year-old daughter to be in a
commercial. Now, she wasn't starting to make television a career at 3 years of age. I don't think
she was ever going to have a job again for many, many years. But I thought she was cute, and I
thought if they want to photograph her and put her on TV, I'd like to see that, too. So, I spent 4
hours downtown with my 3-year-old getting her signed up for social security. [Laughter] She was
going to get the minimum, the Guild minimum for doing the commercial, which I think then was
$50. But she was signed up. And that was all deducted and so forth.

But -- well, I know that I've taken -- and I can't get to all the hands that are here, and it's very
heartbreaking. I wish I could. I'll tell you, those of you who didn't get your questions asked, if
you'll write them down and leave them with Karna and your name and address -- [laughter] -- I
guarantee you, I will answer them in writing and send you the answers in writing.

And I thank you all very much again for being here. It's been a wonderful experience, and I hope
we see each other again soon. All right. Thank you.

Note: The President spoke at 1:02 p.m. in the State Dining Room at the White House. The
editors and broadcasters were at the White House for briefings by administration officials on the
fiscal year 1984 budget and administration programs.